The reaction to Iron Fist's backstory isn't based purely on hearing the word dragon. Jessica Jones as a character is extremely skeptic in the first place. Luke Cage is a very grounded person. Jessica, Luke, and Matt, have all seen "special" people, but all of their experience of those powers is based in the physical, and even if extraordinary, doesn't take too much of a leap of faith. Really strong, tough skin, can smell and hear things a long distance away - it's all extensions of things they know.
Dragon itself is an unbelievable fantasy for people, but it comes packed with the rest of his backstory.
- "I am the Immortal Iron Fist". What?
- "Protector of Kun'lun". Where?
- "Sworn enemy of the Hand". No one really disputes this.
- "It's Chi". It's not.
- "I plunged my fist into the fiery heart of Shao-Lou the Undying". Uh .....
This is a lot of stuff that gets packaged up and thrown at the Defenders. It required them to believe in mystic powers, locations unheard of, concepts unheard of, and energies unheard of. They're not debating the physical aspects of what Iron Fist can DO, it's just a huge leap of faith that they don't need to make. Why should Jessica Jones start believing that Chi is a thing because some weird dude she just met talked about it? Maybe he IS just on lithium.
It's in line with characterisation for the Defenders. It creates progression in the interactions between them (e.g. by the time Luke and Danny are interacting in Episode 6, the skepticism isn't as pronounced, and Luke even seems to accept it on the surface). It also add material for fun jokes and dialogue
"How are you still hungry?"
"It takes a lot of energy to summon my Chi"
Luke Cage uses his whatever-face